Generic giant moves in from India

Posted AtThe Globe and Mail

India's biggest pharmaceutical company
is setting up shop in Canada and promising to use its
huge portfolio of generic drugs and manufacturing expertise
in India and the United States to shake up the sales
and distribution of drugs in this country.

"We will be a new player that will bring change to the
Canadian marketplace, with a new range of products and
innovation, and success in more than 100 countries."

Canada is the eighth-largest pharmaceutical market in
the world and "coming here is a natural outcome of building
a global company," Mr. Tempest said.

Ranbaxy is the first India-based pharmaceutical company
to establish a subsidiary in Canada and is expected
to use its hefty cost advantage in pricing its medicines.

"They have a huge competitive advantage because of low
production costs in India," said a generic industry
official, who asked not to be identified. Among other
things, research and development costs in India can
be up to 20 per cent lower than in Western industrialized
countries.

Ranbaxy has conducted 161 clinical trials in Canada
over the past five years, investing $32-million to prepare
for a Canadian launch. It has already received Health
Canada approval to sell eight drugs in the anti-infective,
diabetes, central nervous system and cardiovascular
sectors, including Carvedilol, Ciprofloxacin, Citalopram,
Domperidone, Lovastatin, Atenolol, Metformin and Zopiclone.

"We will start shipping product in a few weeks," said
Bill Abboud, who was named president and general manager
of Ranbaxy Pharmaceuticals Canada Inc. in October, 2004.
Moreover, the company plans to launch a significant
number of new products in the next few years, he added.

Mr. Abboud said the Mississauga-based company's sales
force of four people will deal directly with the dozen
or so retail drug chains that control almost 70 per
cent of the market.

With global sales of $1.2-billion (U.S.) last year,
Ranbaxy Labs is the industry's eighth-largest generic
company. Mr. Tempest said the company is forecasting
sales of $2-billion by 2007, largely through new product
flow, for a compound annual growth rate of 20 per cent
between 2003 and 2007.

In the United States, its largest market, Ranbaxy has
obtained 102 drug approvals and has 50 pending with
the Food and Drug Administration. They include up to
11 so-called "first-to-file" applications, with brand-name
drug sales of $13-billion, including a generic version
of Pfizer Inc.'s Lipitor.

Mr. Tempest said drugs from the company's U.S. and European
portfolios are candidates to be introduced into Canada.
"Like Australia, Canada is a country where you can utilize
your intellectual property to generate drug product
licences," he added.

As a fully integrated drug company, Ranbaxy buys raw
materials to make active pharmaceutical ingredients
(API), which are converted into tablets and capsules.

"Buyers at drug chains are very keen on talking to generic
companies that make API," Mr. Tempest said. "These companies
are in control of product flow. They can guarantee supply
and competitive prices."

Global ambitions

Ranbaxy Laboratories Ltd., India's largest pharmaceutical
company, announced yesterday it will expand into Canada.
Bill Abboud, left, will be the general manager of the
Canadian operation; Brian Tempest, right, is Ranbaxy's
chief executive officer.

Company profile

Products are sold in over 100 countries, with manufacturing
operations in seven and ground presence in 45. The company
employs about 9,000 people, 1,100 of them in research
and development.

Incorporated in 1961, went public in 1973.

Global sales of $1.2-billion (U.S.), an increase of
21 per cent over the prior year. Overseas markets account
for 78 per cent of sales.

Research and development spending is equal to 7 per
cent of its sales in 2004, with major research focus
on urology, anti-infectives, respiratory, anti-inflammatory
and metabolic disorders.

Goal is to be among the top five generic players with
$5-billion in sales by 2012. Has adopted a multipronged
strategy: Acquisition of brands overseas; an emphasis
on brand marketing in the U.S. and Europe; and entering
new markets with value-added product offerings.

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